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WorksheetsPoA - Revision Final
Total questions: 88
Worksheet time: 1hrs 28mins
Name
Class
Date
1.
Which of the following statements is incorrect?
a)
Assets - Capital = Liabilities
b)
Liabilities + Capital = Assets
c)
Liabilities + Assets = Capital
d)
Assets - Liabilities = Capital
2.
Which of the following is not an asset?
a)
Buildings
b)
Cash balance
c)
Trade receivables
d)
Loan from K. Harris
3.
Which of the following is a liability?
a)
Machinery
b)
Trade payables for goods
c)
Motor vehicles
d)
Cash at bank
4.
Which of the following best describes the meaning of ‘Purchases’?
a)
Items bought
b)
Goods bought on time
c)
Goods bought for resale
d)
Goods paid for
5.
Which of the following should not be called ‘Sales’?
a)
Office fixtures sold
b)
Goods sold on time
c)
Goods sold for cash
d)
Sale of item previously included in ‘Purchases’
6.
Which of the following is correct?
a)
Profit does not alter capital
b)
Profit reduces capital
c)
Capital can only come from profit
d)
Profit increases capital
7.
Which of the following best describes a trial balance?
a)
It shows the financial position of a business
b)
It shows the financial position of a businessIt is a special account
c)
It shows all the entries in the books
d)
It is a list of balances on the books
8.
Is it true that the trial balance totals should agree?
a)
No, there are sometimes good reasons why they differ
b)
Yes, except where the trial balance is extracted at the year end
c)
Yes, always
d)
No, because it is not a balance sheet
9.
Gross profit is
a)
Excess of sales over cost of goods sold
b)
Sales less purchases
c)
Cost of goods sold + opening inventory
d)
Net profit less expenses of the period
10.
Net profit is calculated in th
a)
Trading account
b)
Profit and loss account
c)
Trial balance
d)
Balance sheet
11.
To find the value of closing inventory at the end of a period we
a)
Do this by physically counting the inventory (i.e. stocktaking)
b)
Look in the inventory account
c)
Deduct opening inventory from cost of goods sold
d)
Deduct cost of goods sold from sales
12.
The credit entry for net profit is on the credit side of
a)
The trading account
b)
The profit and loss account
c)
The drawings account
d)
The drawings account
13.
Which of these best describes a balance sheet?
a)
An account proving the books balance
b)
A record of closing entries
c)
A listing of balances
d)
A statement of assets
14.
The descending order in which current assets should be shown in the balance sheet is
a)
Inventory, Trade receivables, Bank, Cash
b)
Cash, Bank, Trade receivables, Inventory
c)
Trade receivables, Inventory, Bank, Cash
d)
Inventory, Trade receivables, Cash, Bank
15.
Which of these best describes non-current assets?
a)
Items bought to be used in the business
b)
Items which will not wear out quickly
c)
Expensive items bought for the business
d)
Items having a long life and not bought specifically for resale
16.
Carriage inwards is charged to the trading account because
a)
It is an expense connected with buying goods
b)
It should not go in the balance sheet
c)
It is not part of motor expenses
d)
Carriage outwards goes in the profit and loss account
17.
A normal set of financial statements is prepared on the assumption that the business will
continue trading for the foreseeable future, with no intention, nor any need to close down. What
name is given to this assumption?
a)
Going concern
b)
Prudence
c)
Consistency
d)
Perpetual succession
18.
Suppliers’ personal accounts are found in the
a)
Nominal ledger
b)
General ledger
c)
Purchases ledger
d)
Sales ledger
19.
The sales day book is best described as
a)
Part of the double entry system
b)
Containing customers’ accounts
c)
Containing real accounts
d)
A list of credit sales
20.
Which of the following are personal accounts? (i) Buildings
(ii) Wages
(iii) Trade receivables
(iv) Trade payables
a)
(i) and (iv) only
b)
(ii) and (iii) only
c)
(iii) and (iv) only
d)
(ii) and (iv) only
21.
Transactions involve two elements. Which one guides you to identify the accounts to debit
and credit?
a)
The item exchanged
b)
The buyer
c)
The seller
d)
The form of settlement
22.
What are the journal entries if you exchange a van for a car from a second-hand motor
dealer called R. Main?
a)
Dr R. Main Cr Van
b)
Dr Car Cr Van
c)
Dr Car Cr R Main
d)
Dr Van Cr Car
23.
A debit balance of £100 in a cash account shows that
a)
There was £100 cash in hand
b)
Cash has been overspent by £100
c)
£100 was the total of cash paid out
d)
The total of cash received was less than £100
24.
£50 cash taken from the cash till and banked is entered
a)
Debit cash column £50: Credit bank column £50
b)
Debit bank column £50: Credit cash column £50
c)
Debit cash column £50: Credit cash column £50
d)
Debit bank column £50: Credit bank column £50
25.
What are the two fundamental characteristics of useful financial information according to
the IASB’s Conceptual Framework for Financial Reporting?
a)
Completeness and neutrality
b)
Comparability and understandability
c)
Timeliness and verifiability
d)
Relevance and faithful representation
26.
‘Posting’ the transactions in bookkeeping means
a)
Making the first entry of a double entry transaction
b)
Entering items in a cash book
c)
Making the second entry of a double entry transaction
d)
Something other than the above
27.
Which of the following do not affect trial balance agreement? (i) Sales £105 to A.Henry entered in P.Henry account; (ii) Cheque payment of £134 for Motor expenses entered only in Cash book; (iii) Purchases £440 from C.Browne entered in both account as £404; (iv) Wages account added up incorrectly, being totalled £10 too much
a)
(i) and (iv) only
b)
(i) and (iii)
c)
(ii) and (iii)
d)
(iii) and (iv)
28.
Credit notes issued by us will be entered in our
a)
Sales Account
b)
Return Inwards Account
c)
Return Inwards Book
d)
Return Outwards Book
29.
The total of the Returns Outwards Book is transferred to
a)
The credit side of the Return Outwards Account
b)
The debit side of the Return Outwards Account
c)
The credit side of the Return Outwards Book
d)
The debit side of the Purchase Return Journal
30.
A credit balance brought down on a Rent Account means
a)
We owe that rent at that date
b)
We have paid that rent in advance at that date
c)
We have paid too much rent
d)
We have paid too little in rent
31.
A debit balance brought down on a Packing Materials Account means
a)
We owe for packing materials
b)
We are owed for packing materials
c)
We have lost money on packing materials
d)
We have an inventory of packing materials unused
32.
If we take goods for own use we should
a)
Debit Drawings Account: Credit Purchases Account
b)
Debit Purchases Account: Credit Drawings Account
c)
Debit Drawings Account: Credit Inventory Account
d)
Debit Sales Account: Credit Inventory Account
33.
The Journal is
a)
Part of the double entry system
b)
A supplement to the Cash Book
c)
Not part of the double entry system
d)
Not part of the double entry system
34.
Which of the following equations properly represents a derivation of the fundamental accounting equation?
a)
Assets + liabilities = owner's equity.
b)
Assets = owner's equity.
c)
Cash = assets.
d)
Assets – liabilities = owner's equity.
35.
Wilson Company owns land that cost $100,000. If a “quick sale” of the land was necessary to generate cash, the company feels it would receive only $80,000. The company continues to report the asset on the balance sheet at $100,000. Which of the following concepts justifies this?
a)
The historical-cost principle.
b)
The value is tied to objective and verifiable past transactions.
c)
Neither of the above.
d)
Both "a" and "b".
36.
Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in retained earnings?
a)
Net loss.
b)
Net income.
c)
Dividends.
d)
Investments by stockholders.
37.
Which of these items would be accounted for as an expense?
a)
Repayment of a bank loan.
b)
Dividends to stockholders.
c)
The purchase of land.
d)
Payment of the current period's rent.
38.
Which of the following transactions would have no impact on stockholders’ equity?
a)
Purchase of land from the proceeds of a bank loan.
b)
Dividends to stockholders.
c)
Net loss.
d)
Investments of cash by stockholders.
39.
Which of the following would not be included on a balance sheet?
a)
Accounts receivable.
b)
Accounts payable.
c)
Sales.
d)
Cash.
40.
Of the following account types, which would be increased by a debit?
a)
Liabilities and expenses.
b)
Assets and equity.
c)
Assets and expenses.
d)
Equity and revenues.
41.
The following comments all relate to the recording process. Which of these statements is correct?
a)
The general ledger is a chronological record of transactions.
b)
The general ledger is posted from transactions recorded in the general journal.
c)
The trial balance provides the primary source document for recording transactions into the general journal.
d)
Transposition is the transfer of information from the general journal to the general ledger.
42.
The following comments each relate to the recording of journal entries. Which statement is true?
a)
For any given journal entry, debits must exceed credits.
b)
It is customary to record credits on the left and debits on the right.
c)
The chart of accounts reveals the amount to debit and credit to the affected accounts.
d)
Journalization is the process of converting transactions and events into debit/credit format.
43.
The proper journal entry to record Ransom Company’s billing of clients for $500 of services rendered is:
a)
Cash 500
Accounts Receivable 500
b)
Accounts Receivable 500
Capital Stock 500
c)
Accounts Receivable 500
Service Revenue 500
d)
Cash 500
Service Revenue 500
44.
The proper journal entry to record $1,000 of Dividends paid by Myer’s Corporation is:
a)
Dividends 1,000
Cash 1,000
b)
Accounts Payable 1,000
Cash 1,000
c)
Dividends Expense 1,000
Cash 1,000
d)
Dividends Expense 1,000
Service Revenue 1,000
45.
Lynn Lipincott invested land valued at $5,000 in her business. This transaction would be recorded by:
a)
Cash 5,000
Capital Stock 5,000
b)
Land 5,000
Capital Stock 5,000
c)
Land 5,000
Service Revenue 5,000
d)
Capital Stock 5,000
Land 5,000
46.
The trial balance:
a)
Is a formal financial statement.
b)
Is used to prove that there are no errors in the journal or ledger.
c)
Provides a listing of every account in the chart of accounts.
d)
Provides a listing of the balance of each account in active use.
47.
For purposes of measuring business income, the life of a business is:
a)
divided into specific points in time.
b)
divided into irregular cycles.
c)
divided into discrete accounting periods.
d)
considered to be a continuous cycle.
48.
Adjusting entries at the end of an accounting period would not be required for which of the following
a)
Multiperiod costs that must be split among two or more accounting periods.
b)
Multiperiod revenues that must be split among two or more accounting periods.
c)
Expenses that have been incurred in a given period but not as yet recorded in the accounts.
d)
Revenue that has been earned and recorded in the accounting records.
49.
Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. Which of the following journal entries would Blankenship ordinarily record on the Friday payday?
a)
Salary Expense 10,000
Salary Payable 10,000
b)
Salary Expense 10,000
Cash 10,000
c)
Salary Payable 10,000
Cash 10,000
d)
Salary Payable 10,000
Salary Expense 10,000
50.
Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. What journal entry would be recorded (on Wednesday) if the end of the accounting period occurred on a Wednesday?
a)
Salary Expense 6,000
Salary Payable 6,000
b)
Salary Expense 6,000
Cash 6,000
c)
Salary Payable 6,000
Cash 6,000
d)
Salary Payable 6,000
Salary Expense 6,000
51.
Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. Blankenship’s year-end occurred on Wednesday, at which time a correct adjusting entry was recorded. On the following Friday, which of the following payroll journal entries should be recorded?
a)
Salary Expense 10,000
Cash 10,000
b)
Salary Expense 4,000
Salary Payable 6,000
Cash 10,000
c)
Salary Expense 6,000
Salary Payable 4,000
Cash 10,000
d)
Salary Payable 10,000
Cash 10,000
52.
On November 1, 20X1, Limit Company purchased a one-year insurance policy for $12,000. Limit Company debited Cash and credited Prepaid Insurance for $12,000. At the end of December, 20X1, $2,000 of insurance had expired. The journal entry to properly state all accounts involved on December 31, 20X1, would be:
a)
Insurance Expense 2,000
Prepaid Insurance 22,000
Cash 24,000
b)
Insurance Expense 2,000
Prepaid Insurance 2,000
c)
Insurance Expense 2,000
Cash 2,000
d)
Prepaid Insurance 2,000
Insurance Expense 2,000
53.
Which of the following accounts would not be closed at the end of an accounting period?
a)
Income Summary
b)
Dividends
c)
Revenue
d)
Capital Stock
54.
After closing all revenue and expense accounts, Norris Company had a debit balance in its Income Summary account of $10,000. The proper entry to record the closing of the Income Summary account would be:
a)
Revenue 10,000
Income Summary 10,000
b)
Retained Earnings 10,000
Income Summary 10,000
c)
Income Summary 10,000
Retained Earnings 10,000
d)
Income Summary 10,000
Expenses 10,000
55.
Shipman Company had accrued salaries of $300 on December 31. The company recorded reversing entries on the following January 1. On the next payday, January 7, the appropriate entry to record the payment of $1,000 in salaries should include:
a)
a debit to Salaries Expense of $1,000.
b)
a debit to Salaries Expense of $700.
c)
a debit to Salaries Expense of $1,300.
d)
a debit to Salaries Payable for $300.
56.
What type of accounts are Deferred Revenues and Unearned Revenues?
a)
Asset
b)
Liability
c)
Equity
d)
Revenue
57.
Which of the following will be included in the adjusting entry to accrue interest expense?
a)
A Debit To Cash
b)
A Credit To Interest Payable
c)
A Debit To Interest Payable
d)
A Debit To Prepaid Interest
58.
Which of the following will be included in the adjusting entry to accrue interest income or interest revenues?
a)
A Debit To Cash
b)
A Debit To Interest Income
c)
A Credit To Interest Receivable
d)
A Debit To Interest Receivable
59.
The adjusting entry that reduces the balance in Prepaid Insurance will also include which of the following?
a)
A Credit To Cash
b)
A Credit To Insurance Expense
c)
A Debit To Insurance Expense
d)
A Debit To Insurance Payable
60.
The adjusting entry that reduces the balance in Deferred Revenues or Unearned Revenues will also include which of the following?
a)
A Debit To Cash
b)
A Credit To Fees Earned
c)
A Debit To Fees Earned
d)
A Credit To Fees Receivable
61.
What type of accounts are Interest Receivable and Fees Receivable?
a)
Asset
b)
Liability
c)
Equity
d)
Expense
62.
What type of accounts are Prepaid Insurance, Prepaid Advertising, and Prepaid Expenses?
a)
Asset
b)
Liability
c)
Equity
d)
Expense
63.
Which financial statement's structure is closest to that of the basic accounting equation?
a)
Balance Sheet
b)
Income Statement
c)
Statement Of Cash Flows
d)
Statement Of Stockholders’ Equity
64.
Which financial statement will allow you to determine the gross margin for a retailer or manufacturer?
a)
Balance Sheet
b)
Income Statement
c)
Statement Of Cash Flows
d)
Statement Of Stockholders’ Equity
65.
Which of the following is a category, classification, or element of the balance sheet?
a)
Expenses
b)
Gains
c)
Liabilities
d)
Losses
66.
Which of the following is an asset account?
a)
Accounts Payable
b)
Prepaid Insurance
c)
Unearned Revenue
d)
All of the above
67.
ABC Co. received $1,000 in December for services it will perform in the following month. ABC uses the accrual basis of accounting. In December ABC debited Cash for $1,000. What will be the other account involved in the December accounting entry prepared by ABC (and what type of account is it)?
a)
Accounts Receivable (asset)
b)
Prepaid Services (asset)
c)
Service Revenues (revenue)
d)
Unearned Revenues (liability)
68.
ABC Co. performed services for Client Kay in December and billed Kay $4,000 with terms of net 30 days. ABC follows the accrual basis of accounting. In January ABC received the $4,000 from Kay. In January ABC will debit Cash, since cash was received. What account should ABC credit in the January entry?
a)
Accounts Receivable
b)
Service Revenue
c)
Owner's Equity
d)
None of the above
69.
ABC Co. follows the accrual basis of accounting and performs a service on account (on credit) in December. The service was billed at the agreed upon amount of $3,500. ABC Co. debited Accounts Receivable for $3,500 and credited Service Revenue for $3,500. The effect of this entry on the balance sheet of ABC is to increase assets by $3,500 and to
a)
Decrease Assets By $3,500
b)
Increase Owner's (Stockholders') Equity By $3,500
c)
Neither (A) and (B)
d)
Both (A) and (B)
70.
Which of the following accounts is not a current asset?
a)
Accounts Receivable
b)
Land
c)
Prepaid Insurance
d)
Supplies
71.
Which of the following is normally a current liability?
a)
Note Payable Due In Two Years
b)
Unearned Revenue
c)
Neither (A) and (B)
d)
Both (A) and (B)
72.
ABC Co. incurs cleanup expense of $500 on December 30. The supplier's invoice states that the $500 is due by January 10 and ABC will pay the invoice on January 9. ABC follows the accrual basis of accounting and its accounting year ends on December 31. What is the effect of the cleanup service on the December balance sheet of ABC?
a)
Assets Decreased
b)
Liabilities Increased
c)
No Effect On Owner's Equity
d)
None of the above
73.
Notes Payable could not appear as a line on the balance sheet in which classification?
a)
Current Assets
b)
Current Liabilities
c)
Long-term Liabilities
d)
Owner's Equity
74.
On December 1, ABC Co. hired Juanita Perez to begin working on January 2 at a monthly salary of $4,000. ABC's balance sheet of December 31 will show a liability of what amount?
a)
4000
b)
24000
c)
48000
d)
No liability
75.
The personal assets of the owner of a company will not appear on the company's balance sheet because of which principle/guideline?
a)
Cost
b)
Economic Entity
c)
Monetary Unit
d)
None of the above
76.
Which principle/guideline requires a company's balance sheet to report its land at the amount the company paid to acquire the land, even if the land could be sold today at a significantly higher amount?
a)
Cost
b)
Economic Entity
c)
Monetary Unit
d)
None of the above
77.
A very large corporation's financial statements have the dollar amounts rounded to the nearest $1,000. Which accounting principle/guideline justifies not reporting the amounts to the penny?
a)
Full Disclosure
b)
Materiality
c)
Monetary Unit
d)
None of the above
78.
Which principle/guideline is associated with the assumption that the company will continue on long enough to carry out its objectives and commitments?
a)
Economic Entity
b)
Going Concern
c)
Time period
d)
None of the above
79.
Accountants might recognize losses but not gains in certain situations. For example, the company might write-down the cost of inventory, but will not write-up the cost of inventory. Which principle/guideline is associated with this action?
a)
Conservatism
b)
Materiality
c)
Monetary Unit
d)
None of the above
80.
Which principle/guideline directs a company to show all the expenses related to its revenues of a specified period even if the expenses were not paid in that period?
a)
Cost
b)
Matching
c)
Monetary Unit
d)
None of the above
81.
When the accountant has to choose between two acceptable alternatives, the accountant should select the alternative that will report less profit, less asset amount, or a greater liability amount. This is based upon which principle/guideline?
a)
Conservatism
b)
Cost
c)
Materiality
d)
None of the above
82.
A large company purchases a $250 digital camera and expenses it immediately instead of recording it as an asset and depreciating it over its useful life. This practice may be acceptable because of which principle/guideline?
a)
Cost
b)
Matching
c)
Materiality
d)
None of the above
83.
A corporation pays its annual property tax bill of approximately $12,000 in one payment each December 28. During the year, the corporation's monthly income statements report Property Tax Expense of $1,000. This is an example of which accounting principle/guideline?
a)
Conservatism
b)
Matching
c)
Monetary Unit
d)
None of the above
84.
Accrual accounting is based on this principle/guideline.
a)
Cost
b)
Full Disclosure
c)
Matching
d)
None of the above
85.
The creative chief executive of a corporation who is personally responsible for numerous inventions and innovations is not reported as an asset on the corporation's balance sheet. The accounting principle/guideline that prevents the corporation for reporting this person as an asset is
a)
Conservatism
b)
Cost
c)
Going concern
d)
None of the above
86.
Which financial statement reports the revenues and expenses for a period of time such as a year or a month?
a)
Balance Sheet
b)
Income Statement
c)
Statement Of Cash Flows
d)
Statement Of Stockholders’ Equity
87.
Which financial statement reports the assets, liabilities, and stockholders' (owner's) equity at a specific date?
a)
Balance Sheet
b)
Income Statement
c)
Statement Of Cash Flows
d)
Statement Of Stockholders’ Equity
88.
Assets are usually reported on the balance sheet at which amount?
a)
Cost
b)
Current Market Value
c)
Expected Selling Price
d)
None of the above
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